IndusInd Bank approves acquisition of Bharat Financial

Private lender IndusInd Bank today said it will acquire Bharat Financial Inclusion Ltd (BFIL), the country's second-largest microfinance company, a move that will help increase the bank's size and reach.

This will be first ever merger of a microfinance firm into a bank in the country and a test case for other such merger in future.

The board at its meeting today approved a composite scheme of arrangement among BFIL, IndusInd Bank and a wholly owned subsidiary of the bank to be incorporated for the purpose of acquisition, the bank said in a regulatory filing to the stock exchanges.

The scheme is subject to the approval of the Reserve Bank of India, the Competition Commission of India, the Securities and Exchange Board of India among others, it said.

"The composite scheme will be filed with the designated stock exchanges as per the applicable provisions following the receipt of RBI approval," it added.

The scheme contemplates merger of Bharat Financial with IndusInd and simultaneous transfer of BFIL's Business Correspondent operations into a wholly owned subsidiary of the bank, which will be incorporated after receipt of requisite regulatory approvals, according to a joint statement.

Upon the scheme becoming effective, BFIL will stand merged into IndusInd and shareholders of BFIL will receive shares of the bank in exchange for shares held as per the approved swap ratio.

Last month, both the entities had initiated talks to explore the possibility of merger.

BFIL, formerly SKS Microfinance, had a customer base of 68 lakh and loan portfolio of Rs 7,709 crore as of June 30.

However, the microfinance company suffered a loss of Rs 37 crore for the quarter to June as against Rs 236 crore in the same period a year ago. For 2016-17, the company had recorded a profit of Rs 290 crore.

(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)